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Why is Ethiopia Poor?

Posted on , Updated on by Alemayehu G. Mariam

First, Why is Africa Poor?

George Ayittey, the renowned Ghanaian economist and president of the Free Africa Foundation swears that “Africa is poor because she is not free”. Like Ayittey, Robert Guest, business editor for The Economist, in his book The Shackled Continent (2004), declares that “Africans are poor because they are poorly governed.” He argues that “Africa is the only continent to have grown poorer over the last three decades” while other developing countries and regions have grown richer. Much of Africa, it seems, was better off at the end of colonialism than it is today.

For Ayittey and Guest, the tens of billions of dollars in Western aid to Africa have done very little to improve the lives of Africans; at best, aid has served to “bankroll tyrants” and facilitate experimentation by “idealists with hopeless economic policies.” Statism (the state as the principal change agent) and dictatorship have denied the African masses basic political and economic freedoms while the few privileged kleptocrats (or thieves that have pirated the ship of state, emptied out the national treasury and plundered the economy) live the sweet life of luxury (la dolce vita), not entirely unlike the “good old” colonial times. As Ayittey explains, much of Africa today suffers under the control of “vampire states” with “governments that have been hijacked by a phalanx of bandits and crooks who would use the instruments of the state machinery to enrich themselves and their cronies and their tribesmen and exclude everybody else.” (“Hyena States” would be a fitting metaphor considering the African landscape and the rapacious and predatory nature of the crooks.) Simply stated, much of Africa languishes under the rule of thugtators (thugtatorship is the  highest stage of African dictatorship) who cling to power for the single purpose of using the apparatuses of the state to loot and ransack their nations. Such is the unvarnished truth about Africa’s entrapment in perpetual post-independence poverty and destitution.

Could it be said equally that Ethiopia is at the tail end of the poorest countries on the planet because she is not free and gasps in the jaws of a “vampiric” dictatorship? In other words….

Is Ethiopia Poor, Hungry, Ill and Illiterate Because She is Not Free and Poorly Governed?

A couple of weeks ago, the Legatum Institute (LI), an independent non-partisan public policy group based in London, released its 2011 Legatum Prosperity Index (LPI) which ranked Ethiopia a pretty dismal 108th/110 countries.[1] LPI’s findings are sobering as they are heartbreaking. Ethiopia has an “unemployment rate [that] is almost 21%, which is the sixth highest rate, globally.” The “capital per worker in Ethiopia is the fourth lowest worldwide.” The country has “virtually no investment in R&D.” The ability of Ethiopians “to start and run a business is highly limited… [with a] communication infrastructure [that] is weak with only five mobile phones for every 100 citizens”; and the availability of internet bandwidth and secure servers is negligible. Inequality is systemic and widespread and the country is among the bottom ten countries on the Index. The Ethiopian “education system is poor at all levels and its population is deeply dissatisfied.” There is “only one teacher for every 58 pupils at primary level, there is a massive shortage of educators, and Ethiopian workers are typically poorly educated.” Less than a “quarter of the population believe Ethiopian children have the opportunity to learn and grow every day, which is the lowest such rate in the Index.”

On  “health outcomes, Ethiopia performs very poorly. Its infant mortality rate, 67 deaths per 1,000 live births, and its health-adjusted life expectancy of 50 years, placing Ethiopia among the bottom 20 nations.” The population has high mortality rates from “Tuberculosis infections and respiratory diseases. Access to hospital beds and sanitation facilities is very limited, placing the country 109th and 110th (very last) on these measures of health infrastructure.” The core problem of poor governance is reflected in the fact that “there appears to be little respect for the rule of law, and the country is notable for its poor regulatory environment for business, placing 101st in the Index on this variable.”

But it is not only the LPI that has ranked Ethiopia at the rump of the most impoverished and poorly governed  nations in the world. Last year, the Oxford Poverty and Human Development Initiative (OPHDI) Multidimensional Poverty Index 2010 (formerly annual U.N.D.P. Human Poverty Index) ranked Ethiopia as the second poorest (ahead of famine-ravaged Mali) country on the planet. According to OPHDI, the percentage of the Ethiopian population in “severe poverty” (living on less than USD$1 a day) in 2005 was 72.3%.  Six million Ethiopians needed emergency food aid in 2010 and many more millions needed food aid in 2011 in what the U.N. described as the “worst drought in over half a century to hit parts of East Africa”. The World Bank this past June concluded that  “Ethiopia’s dependence on foreign capital to finance budget deficits and a five-year investment plan is unsustainable.” The Bank criticized dictator Meles Zenawi’s “dependen[ce] on foreign capital or other means of financing investment in an unhealthy, unsustainable way.” Ethiopia is the world’s second-biggest recipient of foreign aid, after Afghanistan, according to the Organization for Cooperation and Economic Development rankings of developing nations because its “leaders” have perfected the art of international mendicancy (panhandling).

That is not all. Every international index over the past several years has ranked Ethiopia at the very bottom of the scale including Transparency International’s Corruption Index (among most corrupt countries), the Failed States Index (among the most failed), the Index of Economic Freedom (among the most economically repressive), the International Bank for Reconstruction and Development Investment Climate Assessment (among the most unfriendly to business),  the Ibrahim Index of African Governance (among the most poorly governed African countries), the Bertelsmann Political and Economic Transformation Index (among countries most in need of reform) and the Environmental Performance Index (among countries with poorest environmental and public health indicators).

Of course, none of that comes as a surprise to those who are familiar with the  fakeonomics of Meles Zenawi. Zenawi says all of the Indexes, the World Bank and the International Monetary Fund (IMF) are wrong. He boldly claims the Ethiopian “economy recorded an average economic growth rate of 11 percent over the past seven years.” But that incredibly rosy growth rate figure, often repeated and republished mindlessly and unquestioningly by the international media, is based exclusively on statistics manufactured by Zenawi’s statistics department. This past June, the IMF debunked Zenawi’s imaginary economic growth estimate of 11.4 percent for 2009 “saying 7.5 percent is more realistic.” The IMF “forecast is even lower growth of about 6 percent for the coming year” because of a “more restrictive business climate”.

Economic principles, facts and realities are irrelevant to Zenawi. According to “Zenawinomics” (a/k/a “Growth and Transformation Plan”), there are bottomless pots of gold awaiting Ethiopians at the end of the rainbow in 2015: The Ethiopian economy will grow by 14.9 percent (oddly enough not 15 percent). There will be “food security at household and national level.” There will be “more than 2000 km of railway networks would be constructed” and power generation will be in the range of “ 8,000 to 10,000 MW from water and wind resources during the next five years.” The “whole community has mobilized to buy bonds. This huge savings and mobilization is used for infrastructure development… We are getting loans from China, India, Turkey and South Korea, so all these foreign savings are also mobilized… So I think we can perform on the ambitious plans that are in place.”

Zenawinomics is the economics of a magical wonderland, very much like Alice’s Wonderland: “If I had a world of my own,” said Alice “everything would be nonsense. Nothing would be what it is because everything would be what it isn’t. And contrary-wise; what it is it wouldn’t be, and what it wouldn’t be, it would. You see?”

Maybe you don’t see. That is the whole point. In what Zenawi describes as “one of fastest growing non-oil economies in Africa,” inflation is soaring, and by mid-2011, Zenawi’s Central Statistical Agency reported that the annual inflation rate had increased by 38 percent and food prices had surged by 45.3 percent. There are more than 12 million people who are chronically or periodically food insecure. Yet, Zenawi is handing out “large chunks” of the most fertile land in the country for free, to be sure for pennies, to foreign agribusiness multinational corporations to farm commercially and export the harvest. This past July, the U.S. Census Bureau had a frightening population forecast: By 2050, Ethiopia’s current population of 90 million population will more than triple to 278 million, placing that country in the top 10 most populous countries in the world. It just does not make any sense.

In May 2010, the Economist Magazine rhetorically asked: “Ethiopia’s prime minister, and his ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF) expect a landslide victory in the general election due on May 23rd, and are likely to get one (they actually “won” it by 99.6 percent!). The bigger question is whether another five years of EPRDF rule will help ordinary Ethiopians, who are among the poorest and hungriest people in the world.”

Ethiopia Can Prosper Only If She Has Good Governance

The United Nations Development Programme and other international lending institutions define ‘governance’ as the “exercise of power or authority – political, economic, administrative or otherwise – to manage a country’s resources and affairs.” Good governance has to do with the “competent management of a country’s resources and affairs in a manner that is open, transparent, accountable, equitable and responsive to people’s needs.” There is substantial empirical research showing that political freedom, strong social and political institutions and proper regulatory mechanisms significantly contribute to economic growth. Stated simply, good governance and “good” (sustainable) growth are based on mutually reinforcing principles.

Where there is good governance, there is substantial political and legal accountability and much greater respect for civil, political and property rights. Leaders are held politically accountable to the people through fair, free and regular elections; and an independent electoral commission ensures there is no voter fraud, voting irregularities, vote buying, voter intimidation and voter harassment. Institutional mechanisms are in place to ensure the rule of law is followed and those exercising political power and engaged in official decision-making perform their duties with transparency and legal accountability.  Where there is good governance, citizens have freedom of association and the right to freely exchange and debate ideas while independent press, and even state-owned media, operate freely along with robust civil society institutions to inform and mobilize the population.

Good governance is an essential precondition for sustainable development. Stable and democratic governing institutions protect political and economic liberty and create an environment of civic participation, which in turn “determines whether a country has the capacity to use resources effectively to promote economic growth and reduce poverty.”   On the other hand, bad or poor governance stifles and impedes development and undermines competition in the marketplace. Where human rights and the rule of law are  disrespected, corruption flourishes and development inevitably suffers aspolitical leaders and public officials siphon off resources from critical school, hospital, road and other public works and community projects to line their pockets.  But where there is good governance, not only is economic development and growth accelerated, even chronic and structural problems of  food insecurity (famine) that have plagued Ethiopia for decades can be controlled and overcome. As Amartya Sen has argued no substantial famine has ever occurred in any independent country with a democratic form of government and a relatively free press.

Because there is little or no political accountability, Ethiopia suffers from poor governance and remains at the bottom of the indexes of the most impoverished nations  in the world. Programs intended for “poverty reduction” have been misused for political mobilization and rewards for voting for the ruling party. The country has been unable to promote broad-based economic growth because business attached to the ruling party have a near-total monopoly and chokehold on the economy making fair competition for non-ruling party affiliated entities in the market an exercise in futility. Because there is little respect for property and contract rights, those non-aligned with the ruling party feel insecure and disinclined to invest. The ruling regime has made little  investment in human resources through effective policies and institutions that improve access to quality education and health services as the LPI data shows. As a result, the rate of flight of professionals, intellectuals, journalists and political dissidents, is among the 10 highest in the world. The  International Organization for Migration has said it all: “There are more Ethiopian doctors practicing in the US city of Chicago than in Ethiopia.”

Ethiopia is universally regarded as one of the least free countries in the world and ranks at the very bottom of the 10 most repressive countries in the world for citizens’ freedoms in expression, belief, association, and personal autonomy. The respected Committee to Protect Journalists says, “Ethiopia is the second-leading jailer of journalists in Africa.” There is little regard for the rule of law as the LPI data confirms. In other words, those who occupy official positions have little respect for the country’s Constitution or laws, or show any concern for the fair administration of justice. The judiciary is merely the legal sledgehammer of the dictator and ruling party. The judges are party hacks enrobed in judicial garb with the principal mission of giving legal imprimatur to manifest official criminality. In sum, the rule of law in Ethiopia has been transmuted into the rule of one man, one party.

Few should be surprised by LPI’s conclusions that the “levels of confidence in the military and judiciary are both very low” and “Ethiopia is the country where expression of political views is perceived by the population to be most restricted.” None of the facts above matter to the dictators in Ethiopia because they are ready, willing and able to do whatever it takes to cling to power.

LPI’s dismal ranking of Ethiopia merely augments what has been solidly established over the years in the other Indexes. The question is why Ethiopia remains at the tail end of the most impoverished countries year after year. Zenawi’s “Federal Ethics and Anti-corruption Commission” (FEAC) conflates corruption and poverty in seeking to pinpoint the answer to this question. FEAC says the major sources of corruption in Ethiopia are “poor governance, lack of accountability and transparency, low level of democratic culture and tradition, lack of citizen participation, lack of clear regulations and authorization, low level of institutional control, extreme poverty and inequity, harmful cultural practices and centralization of authority.” Not quite! Poor governance, lack of accountability and transparency (a/k/a corruption), lack of citizen participation and the absence of the rule of law are the root causes of extreme and widespread  poverty, underdevelopment, aid-dependency, conflict, instability, starvation and injustice in Ethiopia. Have free and fair elections, allow the independent press to flourish, institutionalize the rule of law and maintain an independent judiciary,  professionalize and depoliticize the civil service, the military and police forces and Ethiopians will be well on their way to permanently defeating  poverty and making starvation a footnote in the history of the Ethiopian nation.

Ethiopia is poor, hungry, ill and illiterate because she is poorly governed and not free!

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[1] The Legatum Index is based on 89 different variables covering the economy, entrepreneurship and opportunity, governance, education, health, safety and security, personal freedom, social capital and so on. The Institute uses data collected by the Gallup World Poll, World Trade Organization, World Development Indicators, GDP, World Intellectual Property Organization, UN Human Development Report, World Bank, OECD and World Values Survey.

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The Moral Hazard of U.S. Policy in Africa (Part I)

Posted on by Alemayehu G. Mariam

Note: In ongoing commentaries, the author examines the Obama Administration’s policy in Africa.

Moral Hazard and Moral Bankruptcy

The concept of ‘moral hazard’ in politics may be used to explain a situation in which a government is insulated and immunized from the consequences of its risky, reckless and incompetent behavior. For instance, a regime that is heavily dependent on the safety net of foreign aid, sustained infusion of multilateral loans and perpetual supply of humanitarian assistance will behave differently if it were left to its own devices to deal with the consequences of a mismanaged economy, debilitating corruption and proliferating poverty. Many African regimes today simply avoid the demands of good governance, ignore the rule of law and commit gross violations of human rights in the belief that Western aid, particularly American taxpayer handouts, will always bail them out of their chronic budget deficits and replenish their empty grain silos. Stated simply, Western taxpayer dollars provide the fail safe insurance policy for the survival and persistence of failed regimes in Africa.

By shifting the risk of economic mismanagement, incompetence and corruption to Western donors, and because these donors impose no penalty or disincentive for poor governance, inefficiency, corruption and repression, African regimes are able to cling to power for decades abusing the human rights of their citizens and stealing elections. Western donors continue to bail out failed African states for two reasons. First, the iron fisted African dictators make excellent business partners. Recent Wikileaks cablegrams have documented that the most important objective for Western policy makers in Africa is to support a strongman who can guarantee them stability so that they can continue to do business as usual. Basically, they want a “guy they can do business with.” Second, Western donors believe that the few billions of aid dollars given every year to guarantee “stability” in African countries is more cost effective than helping to nurture a genuinely democratic societies in Africa. The moral hazard in Western policy comes not just from the fact that they provide fail-safe insurance to repressive regimes but also from the rewards of increasing amounts of aid and loans to buffer them from a tsunami of democratic popular uprising. As we have recently seen with Ben Ali in Tunisia, Hosni Mubark in Egypt and Gadahafi in Libya, supporting “strongmen” in Africa will at best produce the illusion of stability, control and permanence for the West. But turning a blind eye to gross human rights violations and complicity in the denial of democratic rights to African peoples is irrefutable evidence of moral bankruptcy.

Obama’s Foreign Policy in Africa

In 2008, when then-Senator Obama was campaigning for the presidency, his advisor on Africa, Witney W. Schneidman, laid out the candidate’s fundamental policy objectives for Africa. Schneidman argued that “Barack Obama understands Africa and its importance to the United States” and “to strengthen our common security, we must invest in our common humanity.” Unquestionably, Senator Obama was a man of little talk and lots of action. He aggressively promoted human rights and accountability throughout the continent. He co-sponsored major legislation to help end genocide in Darfur (Darfur Peace and Accountability Act of 2006), vigorously advocated for a no-fly zone in Darfur (not so in Libya today), secured funds to facilitate free and fair elections in the Democratic Republic of the Congo, helped bring Liberian warlord Charles Taylor to justice and worked to develop a coherent strategy for stabilizing Somalia.

Senator Obama was a straight-talker. In 2006, he visited Kenya and “spoke truth to power” “about the corrosive impact of corruption.” He visited Kibera, Kenya, a 2.5 square kilometer tract of urban land and the second largest slum in Africa and home to an estimated 1.2 million people. He told the proudly delirious mass of poor people, “I love all of you, my brothers — all of you, my sisters”. He embraced the wretched of Kibera: “Everybody in Kibera needs the same opportunities to go to school, to start businesses, to have enough to eat, to have decent clothes.” After the 2007 Kenya elections, Senator Obama rolled his sleeves and for “18 months worked with the Kenyan leadership to help resolve the post-election crisis in that country.” He called out Robert Mugabe for stealing elections in Zimbabwe and condemned his gross human rights violations. In South Africa, he “demanded honesty from the government about HIV/Aids.” He went into “refugee camps in Chad, where he heard first-hand about the experiences of Sudanese women who had been forced from their homes and had their families torn apart, and worse, by Khartoum’s genocidal policies.”

In America, Senator Obama made a “strong effort to reach out to first, second and third generation Africans who have become American citizens to encourage them to be part of the effort that will elect Barack Obama president of the United States.” He actively sought the support of Ethiopians. His campaign specifically called on the “10,000 Ethiopian-Americans in Virginia to help turn that state blue on November 4th.”. On November 4, 2008, Ethiopian Americans came out by the tens of thousands and helped turn Virginia blue.

When Senator Obama became President, his “Africa Agenda” revolved around three basic objectives: 1) “accelerate Africa’s integration into the global economy”, 2) “enhance the peace and security of African states” and 3) “strengthen relationships with those governments, institutions and civil society organizations committed to deepening democracy, accountability and reducing poverty in Africa.” Over the past two years, what we have seen in Africa is a whole lot of deepening repression, human rights violations and corruption in Africa. We have seen very little “accountability, democracy building, the rule of law, judicial reform” and the rest of it.

Much to our dismay, upon becoming President Mr. Obama morphed from a “confrontor” to an accommodator of Africa’s notorious human rights violators. He began preaching and issuing moral pleas to “strongmen” in an effort to redirect them from their evil ways and be nice, and not nasty, to their peoples. From day one, President Obama began soft-pedaling. In his inaugural speech, his message to those stealing elections and committing crimes on their citizens was a bit disarming: “To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history, but that we will extend a hand if you are willing to unclench your fist.” We thought promising rewards to practitioners of corruption and deceit was rather odd; but we deciphered the hidden message: If Africa’s dictators unclench their fists and became nice, American taxpayers will lay some cold hard cash on their open palms. In other words, it is possible to buy off these dictators into becoming nice guys.

In April 2009, President Obama told the Turkish Parliament that the “choices that we make in the coming years will determine whether the future will be shaped by fear or by freedom; by poverty or by prosperity; by strife or by a just, secure and lasting peace.” He told them that “freedom of religion and expression lead to a strong and vibrant civil society” and “an enduring commitment to the rule of law is the only way to achieve the security that comes from justice for all people.” In July 2009, in Ghana, President Obama went on the rhetorical offensive and told Africa’s “strongmen” that they have been driving on the wrong side of history for so long that they are headed straight for history’s dustbin. “Make no mistake: history is on the side of these brave Africans [citizens and their communities driving change], and not with those who use coups or change Constitutions to stay in power. Africa doesn’t need strongmen, it needs strong institutions.” In the same month, U.S. Secretary of State Hilary Clinton, in a major speech at Georgetown University, announced that the Obama Administration’s approach to “putting our principles into action” meant demanding accountability in American global human rights policy. She warned the world that “we must be wary of the steel vise in which governments around the world are slowly crushing civil society and the human spirit.”

In December 2009, Secretary Clinton offered further enlightenment on U.S. human rights policy: “It is crucial that we clarify what we mean when we talk about democracy, because democracy means not only elections to choose leaders, but also active citizens and a free press and an independent judiciary and transparent and responsive institutions that are accountable to all citizens and protect their rights equally and fairly.” She said the “first pillar” of this policy is “accountability”, which means “governments [must] take responsibility by putting human rights into law and embedding them in government institutions; by building strong, independent courts, competent and disciplined police and law enforcement.”

In April 2010, U.S. Assistant Secretary of African Affairs Johnnie Carson speaking at the Second Annual Africa Focus at Harvard University amplified on the meaning of accountability: “A key element in Africa’s transformation is sustained commitment to democracy, rule of law, and constitutional norms…. African countries need civilian governments that deliver services to their people, independent judiciaries that respect and enforce the rule of law, professional security forces that respect human rights, strong and effective legislative institutions, a free and responsible press, and a dynamic civil society.”

In May 2010, in a keynote speech at the 35-nation Organization for Economic Cooperation and Development in Paris, U.S. Attorney General Eric Holder railed against “corruption [which] weakens the rule of law, undermines the promise of democracy, imperils development and stability and faith in our markets.” In July 2010, Holder and Johnnie Carson, announced at the African Summit in Kampala, Uganda that the U.S. is launching a special Kleptocracy Asset Recovery Initiative to catch and prosecute corrupt foreign individuals and institutions operating in the U.S.

Egypt proved to be a test case for President Obama’s policy in Africa. In June 2009, in a speech given at Al-Azhar University in Cairo, President Obama told the young people of his

unyielding belief that all people yearn for certain things: the ability to speak your mind and have a say in how you are governed; confidence in the rule of law and the equal administration of justice; government that is transparent and doesn’t steal from the people; the freedom to live as you choose…. You must maintain your power through consent, not coercion; you must respect the rights of minorities, and participate with a spirit of tolerance and compromise; you must place the interests of your people and the legitimate workings of the political process above your party.

In February 2011, when Egyptian students took the streets seeking to remove Mubarak after three decades of rule by state of emergency and replace it with a “government that is transparent and doesn’t steal from the people”, President Obama was visibly hesitant and wavering. He seemed to stand aloof and not with the young people of Egypt making history. He waffled on the issue of Mubarak’s departure from power and could only offer abstract moral exhortations against “violence” while calling for an “end to the harassment and detention” and the need to create a “process that is broadly inclusive of the Egyptian opposition.” Only after Mubarak took off for Sharm-el-Sheikh did President Obama step forward to take a stand: “For in Egypt it was the moral force of nonviolence, not terrorism, not mindless killing, but nonviolence, moral force that bent the arc of history toward justice once more.” He was effusive in his praise of Egyptian youth: “It’s [Egypt’s] young people who’ve been at the forefront. A new generation, your generation, who want their voices to be heard….America will continue to do everything that we can to support an orderly and genuine transition to democracy in Egypt.”

Backing Up Talk With Action

President Obama is a source of great pride for Africans on the continent and others scattered in the Diaspora. That pride carries with it extraordinarily high expectations for U.S. policy in Africa. His writings and speeches demonstrate that he is very knowledgeable, well-informed and passionate about Africa; and his African ties are deep, strong and genuine. His involvement with Africa dates back to his student days in the early 1980s at Occidental College in California protesting apartheid. Africans would like to seek qualitative changes in U.S. policy towards Africa.

The President’s Africa policy pivots on a strategy of “constructive engagement” of African “leaders”. One cannot clap with one hand alone. There is overwhelming evidence to show that most African leaders are only interested in clinging to power cushioned by the financial support of American taxpayers. They are not interested in engaging America on what matters most to Americans – democracy, freedom, human rights, the rule of law, accountability, transparency and the like. President Obama, on the other hand, has partners right here in the U.S. of A who are willing to engage him on issues of democracy, freedom and human rights in Africa. They are the tens of thousands of Ethiopians who helped turn Virginia blue for him; they are the multitudes of Nigerians in Ohio and Somalis in Minnesota and other Africans throughout the U.S. who opened their wallets, canvassed the precincts and stood in line for hours that cold November morning in 2008 to make Senator Obama President Obama. Democracy, freedom and human rights in Africa cannot be subordinated to the expediency of “engaging” incorrigible African leaders whose sole interest is in clinging to power to enrich themselves and their cronies. Like charity, we believe, constructive engagement should begin at home.

The weekly commentaries of the author are available at: http://www.huffingtonpost.com/alemayehu-g-mariam/